Tax reform that includes a broader base and lower rates, and new retirement savings incentives, will be top priorities of the Senate Finance Committee, incoming Chairman Orrin Hatch, R-Utah, said Tuesday at the U.S. Chamber of Commerce.
The Finance Committee last week launched five bipartisan working groups to explore tax reform proposals for individuals and businesses, ways to promote savings and investment, infrastructure and community development, and international tax issues.
“They are all committed to this process, and I believe it is going to work,” Mr. Hatch said, adding that he expects legislation to be introduced and acted upon later this year.
The committee will also take up Mr. Hatch's SAFE Retirement Act proposal, which would expand the use of multiple employer plans, allow public defined benefit plans to purchase private annuities, and create a “starter 401(k) plan” for small, private-sector employers.
“I remain convinced that my plan represents the best solution to the growing pension crisis in America,” Mr. Hatch said.
Mr. Hatch also pledged that his committee would tackle “a coming entitlement crisis that threatens to swallow up our government and take our economy down with it,” taking a hard look at Social Security, Medicare and Medicaid.
Mr. Hatch criticized President Barack Obama's upcoming tax reform proposal expected to be included in his State of the Union speech Tuesday that would increase capital gains and other taxes on high-income taxpayers. Mr. Obama's plan “appears to be more about redistribution, with added complexity and class warfare … than about tax reform,” Mr. Hatch said.
The president will also reiterate a call to limit tax-favored accumulation of all private retirement assets, including defined benefit and defined contribution plans, which at current interest rates would mean a cap of $3.4 million.
American Benefits Council James Klein said revisiting the idea sends a mixed message about retirement security. Benefits professionals “are astounded” that Washington policymakers “are putting forth proposals that will inhibit savings needed for future retirement security,” Mr. Klein said in a statement.